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Shut up about Barclay Perkins - Brewery profits in WW I

The decade before WW I had been a difficult one. The Liberal government had used increased licence duties for pubs and breweries to partially finance social programmes, such as an old age pension.

The increased licence fees suppressed pub prices, which left many breweries overcapitalised as the value of their assets shrank dramatically. Several brewery companies revalued their shares at 10% of their original value.

Massively increased licence fees for breweries, who were charged according to the size of their output, decreased margins at a time when it was difficult to raise the price of beer. Few breweries were doing well in 1914. But the war helped turn that around.

Whitbread is a good example. Despite doing relatively well compared to many of their peers, they weren’t exactly raking money in.

In 1912, Whitbread made a mere £17,491 net profit. Given that they brewed just shy of a million barrels that year, it works out to a feeble 4.5d per barrel. Ironically, when their output shrank considerably in 1917, their profits increased considerably from under £50,000 to around £200,000. The profit per barrel shot up even more, to 82d per barrel. Whitbread brewed only around half of their 1914 output in 1917 and 1918, but made for times as much net profit.

At the same time, the dividend paid out on Ordinary shares increased from 2% to 7%. Clearly Whitbread was doing well. It’s ironic that exactly when restrictions on brewing started to be ever more sever that breweries started making much more money.

The profits brewers were making led to them being denounced as profiteers in some quarters, notably temperance campaigners.